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Lori-RA
March 19, 2026
Solved

Retained Earnings closing entry is wrong

  • March 19, 2026
  • 1 reply
  • 15 views

Greetings,

I am using QB Desktop Pro Plus 2023.  I have an LLC with two members.  While digging into the capital account balances it appears that the closing entry into the main Retained Earnings account is wrong.  My understanding is that this number should be the net income for the LLC for that year.  The existing entry does not match the Net Income number from the Profit & Loss report for a given year.

I see no way to edit/modify that entry.  Double clicking on the Closing Entry line in the Retained Earnings quick report (which does show a magnifying class icon) opens up a random invoice (???).


HELP!  The errors go back many years and I need to get this resolved.

 

Thanks in advance,

Lori

    Best answer by Aldren18

    Hello, Lori. The Closing Entry line you see in QuickBooks Desktop is not an editable transaction. It’s a calculated line that QuickBooks uses to move each year’s net income into the Retained Earnings account. Any mismatches you’re seeing are usually due to report settings or date ranges rather than a faulty closing entry itself.  

     

    Please note that QuickBooks Desktop doesn’t post an actual journal entry to Retained Earnings at year-end. Instead, it computes the Closing Entry whenever you run the Retained Earnings report. Because this line is not a real transaction, double‑clicking it won’t open an editable journal entry.

     

    I suggest ensuring that the date ranges between the reports are accurate and double-check the accounting method you use (cash or accrual basis). Also, prior‑year transactions that were added or edited after the year‑end will update Retained Earnings but may not be reflected properly in a P&L filtered to just one specific year.

     

    I’ll keep this thread open for any updates or anything else you’d like to share.

    1 reply

    A
    Aldren18QuickBooks TeamAnswer
    QuickBooks Team
    March 19, 2026

    Hello, Lori. The Closing Entry line you see in QuickBooks Desktop is not an editable transaction. It’s a calculated line that QuickBooks uses to move each year’s net income into the Retained Earnings account. Any mismatches you’re seeing are usually due to report settings or date ranges rather than a faulty closing entry itself.  

     

    Please note that QuickBooks Desktop doesn’t post an actual journal entry to Retained Earnings at year-end. Instead, it computes the Closing Entry whenever you run the Retained Earnings report. Because this line is not a real transaction, double‑clicking it won’t open an editable journal entry.

     

    I suggest ensuring that the date ranges between the reports are accurate and double-check the accounting method you use (cash or accrual basis). Also, prior‑year transactions that were added or edited after the year‑end will update Retained Earnings but may not be reflected properly in a P&L filtered to just one specific year.

     

    I’ll keep this thread open for any updates or anything else you’d like to share.

    L
    Lori-RAAuthor
    March 20, 2026

    The problem was accrual vs cash based reporting.  For some whacko reason the Retained Earnings report was set to Accrual where ALL the other reports, including the basic QB accounting method are set to Cash.  I don't

    recall ever changing it, nor can I imagine a reason why that might have happened.


    In fact, for what possible reason would I ever want it to be accrual when I never use that method?

     

    Thanks for your help.

     

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